Leaked EU Plan to Tax Nicotine Pouches Sparks Economic, Political, and Criminal Concerns

A leaked EU document reveals plans for a steep tax hike on nicotine pouches, also known as white snus, sparking a number of concerns, especially given the current ongoing trade wars. Could this backfire and fuel black markets?

A confidential European Commission (EC) document, leaked by Snusjournalen, has revealed a contentious plan to impose a substantial EU-wide tax increase on nicotine pouches (NPs). Spearheaded by the Directorate-General for Taxation and Customs Union (DG TAXUD), the proposed measure could trigger widespread economic, political, and criminal repercussions across the Union.

The timing of this revelation is particularly concerning, as Europe grapples with economic instability. Inflation remains stubbornly high, growth is stagnating, and trade tensions with the U.S. have escalated, with Washington recently announcing new tariffs on European automobiles. Critics argue that higher taxation on white snus could further strain consumers and discourage investment in European manufacturing.

High taxes feed illicit trade
A recent Europol report shared by Euroreporter, “The Changing DNA of Serious and Organised Crime,” highlights the direct link between excessive taxation and the rise of black markets—specifically citing tobacco and nicotine products. The report warns that strict tax policies create opportunities for criminal networks to expand operations, smuggle products across borders, and launder illicit funds. Experts fear that a steep price increase on NPs could drive a surge in illicit sales, with products being illegally imported from non-EU nations like China.

Hence the irony is that rather than boosting government revenue, the tax hike is likely to have the opposite effect. As consumers turn to cheaper, unregulated alternatives, governments may lose existing tax income, with Central and Eastern European countries, where white snus is growing in popularity, being particularly at risk.

Such predictions have been confirmed by data from countries where such measures and other harsh restrictions have been set. Data from Australia have clearly indicated that measures set to make novel nicotine products less accessible to consumers have just fed a flourishing black market of the same products.

Although the European Commission has yet to confirm the directive publicly, the leak has already sparked significant concerns among key stakeholders, including law enforcement, investors, and consumer advocacy groups. Given Europol’s warnings on illicit trade and the broader political and economic climate, this proposed tax increase is shaping up to be one of the most contentious regulatory battles in the coming months.

Economic uncertainty: trade Disputes, inflation, and tariffs
Meanwhile, the vaping industry is also currently navigating a turbulent landscape, facing challenges like evolving regulations, changing consumer trends, and now, the rising impact of global trade tariffs. With the U.S. poised to increase tariffs on Chinese imports, companies that rely on Chinese manufacturing could encounter soaring costs, disrupted supply chains, and reduced competitiveness in the critical American market.

Ongoing U.S.-China trade tensions have already imposed a 25% tariff on vaping products imported from China. However, future policies could push this rate to 100%, effectively doubling production costs and leading to significantly higher retail prices for consumers. This scenario jeopardizes the profitability of vaping companies and the availability of affordable, high-quality products in the U.S..

In response to these challenges, some vaping manufacturers are relocating production from China to Malaysia. Despite China’s well-established manufacturing infrastructure, Malaysia offers strategic advantages, including favourable trade agreements with the U.S., U.K., and European Union. A recent trade deal with the U.K., for example, eliminates tariffs on Malaysian products, enhancing their market accessibility.

Risk assessments should be carried out before setting such measures
In light of these developments, the proposed tax hike on NPs adds yet another layer of uncertainty to an already volatile regulatory and economic landscape. More importantly, with the vaping industry currently facing such a critical juncture, which could result in less availibility of vaping products to smokers using them to quit, a harsh tax set on snus would be currently all the more detriminental to public health.

As history has shown, excessive taxation and restrictive policies often drive consumers toward illicit markets, undermining public health objectives and reducing government revenues. Coupled with ongoing trade tensions and shifting manufacturing dynamics in the vaping industry, this measure could further limit access to harm-reduction alternatives. Moving forward, policymakers should consider the broader implications of such regulations and prioritize evidence-based strategies that support both economic stability and public health goals.